Trade promotion lotteries. If you’ve been googling competition permits and licences, you’ve probably come across this term in your travels – but what does it actually mean and what does it have to do with competitions? After all, you’re not peddling scratchies or picking coloured ping pong balls from glorified, see-through washing machines, so what have ‘lotteries’ got to do with anything?!
A competition for a business is known here in Australia as a trade promotion lottery. Here’s the low-down on what it means for you and your business.
What exactly is a trade promotion lottery?!
LET’S BREAK IT DOWN
The department of Fair Trading in NSW defines trade promotion lotteries best, which is unsurprising given they are the government department responsible for granting licences to run competitions.
Here’s how they define a trade promotion lottery:
“A trade promotion lottery is a free-entry lottery to promote goods or services supplied by a business. It’s sometimes called a sweepstake, competition, contest, or giveaway. If the element of chance determines the winner, the requirements we’ve set out must be met. Unless qualified or expert judges are used and the winner is decided against a set criteria, a competition is not based on skill – it is based on chance.”
That’s a hefty definition with a few important qualities, so let’s break it down.
“A trade promotion lottery is a free-entry lottery…”
I.E. your trade promotion should be free to enter
Yep, you read correctly. Every state and territory agrees that entering your competition should not cost your entrants anything additional beyond the cost of purchasing your product or service or the cost of the call/text to enter (which is capped by some states).
That means you can’t jack up the price of your goods or services to help you pay for your competition. Nor can you rip off entrants with extortionate costs to call or post in their entries.
South Australia’s Consumer and Business Services department that processes licences for SA sums it up nicely:
“Entry must be free for all trade promotions, but:
- participants may have to buy goods or services, which are the subject of the promotion
- the cost of entry by phone can’t be more than 55 cents including GST for landlines and 50 cents for mobile phones (plus mobile charges)
- the cost of entry by post can’t be more than the normal cost of postage.”
So a trade promotion lottery is a free to enter promotion.
“… to promote goods or services supplied by a business.”
I.E. Trade promotions are usually run by businesses
Given the costs and effort involved in running a competition, they’re normally run by businesses as a means to promote a company and therefore encourage sales. The Office of Liquor and Gaming Regulation in Queensland states that…
“Any person may conduct a promotional game; however, they are normally conducted by businesses to promote the sale of products”
Trade promotion lotteries are usually run by trades or businesses – this is where the name trade promotion comes from.
So a trade promotion lottery is a free to enter promotion normally run by a business to promote the sale of products or services.
“It’s sometimes called a sweepstake, competition, contest, or giveaway.”
I.E. a trade promotion lottery = a competition
There really isn’t a difference between a trade promotion lottery, a sweepstake, a competition, a contest or a giveaway here in Australia.
The terms ‘contest’ and ‘sweepstake’ aren’t as highly used here as they are in America, but trade promotion lottery, competition and giveaway are often used interchangeably and are for all intents and purposes the same thing.
So a trade promotion lottery is a free to enter promotion normally run by a business to promote the sale of products or services and is also known as a competition, giveaway, contest or sweepstake.
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“If the element of chance determines the winner…”
I.E. that’s what makes it a lottery
As you may be aware, there are two types of competition you can run: a game of skill and a game of chance.
A game of skill requires entrants to display a skill in their entry and a winner will be picked based on the skill displayed, whereas with a game of chance, skill plays no part in determining the winner and winners are picked at random.
This is where the concept of a ‘lottery’ comes in, as put beautifully by Consumer and Business Services, South Australia:
“If the winners are determined by skill it is not considered a lottery and does not require a trade promotion lottery licence”
If you’ve read our post on working out whether you need a licence for your competition, you’ll know that games of skill do not require a licence in any state in Australia (as long as they meet state licensing conditions of course).
Games of chance, on the other hand, do require a licence in some circumstances – so make sure you’re across licensing requirements in the destinations your competition is open to.
So a trade promotion lottery is a free to enter game of chance promotion, normally run by a business to promote the sale of products or services and is also known as a competition, giveaway, contest or sweepstake; that may require a licence in some states.
There you have it, you’re all clued up on what a trade promotion lottery is, why you should give a flying fig about them and even why they’re called trade promotion lotteries in the first place #themoreyouknow.
If your trade promotion lottery is going to need a licence or permit and you need a hand applying, get in touch with our team and we’ll make sure your lottery promoting your trade is 100% bona fide and legally approved.